[Swiftwater Gazette] Amazon

Sun Feb 1 12:45:38 EST 2009

Brad,

I haven't checked my answer, but it seems to me there is a federal law 
that no state can force Internet companies to collect sales tax for them 
if the company doesn't have a retail outlet in that state.

This was written to foster Internet commerce.

If I buy a toaster on line from Wal-Mart I am charged tax.  If I buy the 
same toaster from Amazon on line, I am not charged tax.  Now, I 
understand the laws of CT require me to disclose and pay tax on 
everything I buy, and you can be sure I fully comply.

However, I buy from Amazon anyhow all things being equal, and I'm sure 
many others buy from Amazon for the same reason.

I believe NY is trying to cut through this right now, and since 
everybody needs money I expect Amazon's advantage to disappear 
nationwide.  This will be very good for local retailers, many of whom 
get to pocket the sales tax they charge.

Have you read Free Lunch?

B.

Brad Haslett wrote:
> Bill,
>
> Technically, the sellers on Amazon are supposed to collect sales tax
> from buyers located in the same state.  Where is Amazon based?  I'm
> clueless, but would caution whatever state it is to not get to
> creative or greedy.  Once upon a time there was a small start-up
> company in Little Rock, AR that had this crazy idea of cutting holes
> in the side of little jets and hauling packages.  The State of
> Arkansas got greedy and decided to collect sales tax on every package
> that flowed through the hub.  The short version of a long story is the
> company moved to Memphis, Tennessee.  Whatever state Amazon is based
> in should stay content with collecting income taxes off their profits
> and not try and "kill the goose that lays the golden eggs". OK, forget
> I said that, of course they'll eventually do something stupid.
> Frankly, I think our tax revenue problems have been solved.  If every
> single Obama Administration nominee just pays his/hers unpaid taxes,
> we'll have revenue flowing like we never dreamed.
>
> Brad
>
>
>
> On Sat, Jan 31, 2009 at 10:41 AM, Bill Effros <bill at effros.com> wrote:
>   
>> Excuse me, folks, but I shop at Amazon because you pay no sales tax.
>> Wonder how well they will do if you have to pay tax for their goods like
>> everyone else. Wonder how long it will take the geniuses in government
>> to figure out that raising sales taxes on everybody else, but not
>> Amazon, won't work.
>>
>> Amazon's entire profit would be eaten up if they had to pay tax on what
>> they sold.
>>
>> B.E.
>>
>>
>> January 30, 2009
>> Profit Rises at Amazon as Shoppers Seek Deals
>> By BRAD STONE
>> (http://topics.nytimes.com/top/reference/timestopics/people/s/brad_stone/index.html?inline=nyt-per)
>>
>> SAN FRANCISCO — In December, Amazon.com
>> (http://topics.nytimes.com/top/news/business/companies/amazon_inc/index.html?inline=nyt-org)
>> said it was having its "best ever" holiday season. On Thursday, it
>> offered proof.
>>
>> The company posted strong earnings in a brutal climate that has punished
>> nearly every other retailer, online and offline. Amazon
>> (http://topics.nytimes.com/top/news/business/companies/amazon_inc/index.html?inline=nyt-org)'s
>> net profit rose 9 percent, to $225 million, or 52 cents a share, in the
>> quarter that ended on Dec. 31, up from $207 million, or 48 cents, in the
>> same quarter a year earlier.
>>
>> "We remain relentlessly focused on serving customers with low prices,
>> great selection and free shipping offers, including Amazon Prime," Jeff
>> Bezos
>> (http://topics.nytimes.com/top/reference/timestopics/people/b/jeffrey_p_bezos/index.html?inline=nyt-per),
>> founder and chief executive of Amazon, said in a statement.
>>
>> The company's revenue climbed 18 percent to $6.70 billion, surpassing
>> Wall Street's expectations. Analysts polled by Thomson Reuters
>> (http://topics.nytimes.com/top/news/business/companies/thomson-reuters-corporation/index.html?inline=nyt-org)
>> on average expected $6.44 billion in revenue.
>>
>> After hours, Amazon shares were trading around $56, an increase of more
>> than 13 percent. In the regular trading session, before Amazon's
>> announcement, shares closed largely unchanged at $50.
>>
>> Amazon's robust growth rate far exceeded the overall growth rate of
>> other online retailers during the holidays, which was slightly down, the
>> Web measurement company comScore
>> (http://topics.nytimes.com/top/news/business/companies/comscore-inc/index.html?inline=nyt-org)
>> said.
>>
>> "We're particularly grateful for the unusually strong demand for Kindle
>> in the fourth quarter," Mr. Bezos said, referring to the company's
>> electronic book reader. It was out of stock for most of the holiday
>> season, but the company encouraged consumers to order it for later delivery.
>>
>> Amazon released no new statistics on sales of the Kindle, which has been
>> a hit. The company has scheduled a news conference in New York on Feb. 9
>> to introduce a new version of the device
>> (http://bits.blogs.nytimes.com/2009/01/27/amazons-kindle-2-will-debut-feb-9/).
>>
>> Some analysts say Amazon may have benefited from the economic slowdown
>> as people turned to the e-commerce site to find bargains.
>>
>> "Amazon may be enjoying a Wal-Mart
>> (http://topics.nytimes.com/top/news/business/companies/wal_mart_stores_inc/index.html?inline=nyt-org)
>> effect, with people trading down to Amazon to get better prices over the
>> holiday," said Mark Mahaney, an analyst at Citigroup
>> (http://topics.nytimes.com/top/news/business/companies/citigroup_inc/index.html?inline=nyt-org).
>> "Amazon must have dramatically taken market share" from other retailers
>> during the quarter, he said.
>>
>> But in a sign that Amazon was not immune to the recession, its operating
>> margins fell to 4.06 percent from 4.78 percent, a result of heavy
>> discounting to persuade reluctant shoppers to buy.
>>
>> Amazon offered a broad estimate for the current quarter and did not make
>> any estimate for the year, as it normally had. It said it expected
>> operating income of as much as $210 million, a 19 percent increase over
>> the first quarter of 2008. At its most pessimistic, the forecast was for
>> a 9 percent increase.
>>
>> One immediate challenge for Amazon is the liquidation of Circuit City.
>> The electronics chain is emptying 154 stores, which could drive down the
>> prices of items like flat-screen televisions.
>>
>> In the long term though, the carnage in the traditional retail sector is
>> "incredibly positive" for Amazon, said Scott W. Devitt, an analyst at
>> Stifel Nicolaus. "Amazon has never been in a stronger structural
>> position, and you have a shrinking industry with a high fixed-cost base
>> that is forcing bankruptcies," he said. "That business has to go somewhere."
>>
>> In another sign of how Amazon.com has diversified its business beyond
>> its original product lines of books, music and movies, the sales of
>> electronics and general merchandise in the fourth quarter grew to $2.89
>> billion, a 31 percent increase over a year earlier. The sale of media
>> items grew just 9 percent in the same period.
>>
>> Among Amazon's newest product offerings and services are motorcycle and
>> all-terrain-vehicle parts, a new Web service called CloudFront for
>> businesses to deliver large content files to their customers, and Amazon
>> Video on Demand, a digital television and movie store that is accessible
>> online or through living room devices like TiVo
>> (http://topics.nytimes.com/top/news/business/companies/tivo-inc/index.html?inline=nyt-org).
>>
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